Small Business Government Contracting Goals Met – First Time in 8 Years

The U.S. federal government met its annual government contracting goal for small businesses — for the first time in 8 years.

Government contracting goals are measured as a percentage of overall government contracts awarded. For 2013 the goal was to award 23% of all prime contracts to small businesses. In fact, the federal government awarded 23.9% of prime contracts to small businesses, worth $83.1 billion. As a whole, the federal government achieved a score of “A” or 100.60% on a scorecard methodology used to measure the goals. See image above containing a partial screenshot of the 2013 scorecard.

SBA Administrator Maria Contreras-Sweet announced the results on Friday afternoon. “When we hit our small business procurement target, it’s a win. Small businesses get the revenue they need to grow and create jobs, and the federal government gets the chance to work with some of the most responsive, innovative and nimble companies in the U.S. while the economy grows,” she said.

The SBA actually measures federal government contracting goals for five different groups of small businesses. For 2013 three groups had their goals met while two (women owned small businesses and HUBZone businesses) did not.

The SBA serves as the champion of small business government contracting.

One way it does that is through establishing and measuring government contracting goals, and then reporting them to the public. But individual agencies actually award the contracts. The Small Business Administration has no power to award government contracts, except for its own agency and it has one of the smallest budgets.

Which Agencies Met Their Small Business Government Contracting Goals?

Each year the SBA publishes scorecards not only for the government as a whole, but for individual agencies to show how each performed.

The majority of federal agencies met their government contracting goals in 2013.

Three agencies, in fact, did so well they earned A+ scores. They were the Office of Personnel Management, Department of the Interior, and Department of Transportation.

However, four agencies have some work to do because they did not meet their government contracting goals. They include:

Department of Energy, with a dismal score of “F” at 68.09%

Department of Justice, with a score of “B” at 91.7%

Department of Defense, with a score of “B” at 93.55%

National Science Foundation, with a score of “B” at 95.84%

Still, percentages can give a skewed picture. That’s because government agencies have vastly different budgets.

Take, for example, the Department of Defense. The DoD has a huge government contracting budget. Defense by itself accounted for over half of the total dollar value of government contracts awarded last year. It awarded a whopping $48.3 billion in government contracts to small businesses.

Compare that to the Department of the Interior. Interior earned an impressive 122.5% of its goal. However, the Department of Interior granted only $1.4 billion in government contracts to small businesses. Its budget is much smaller.

In other words, while the Department of Interior earns kudos for doing so well on its goal, the Department of Defense had a much bigger impact on small businesses in 2013. The DoD awarded far more in dollar value of government contracts to small businesses than any other federal agency. The Department of Defense will continue to have an outsized impact on small business contracting in 2014.

Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

Wow! This is so encouraging. The government is taking its contracting goals seriously. There is no better time than now for those who have been debating on whether to take the plunge or not. Starts with a business plan.

How did Disraeli put it – lies, damnable lies, and statistics? In 2008, Karen Mills embarked on the largest expansion of the definition of “small” in the 60+ years of the SBA. As a result, by 2013, 66,000 very large corporations with up to $36.5million in revenue and up to 1,500 employees were reclassified as “small” (Terry Sutherland, SBA Press Office Director). Companies of this size are actually in the top 1/2 of 1% of the largest businesses in America.

If the SBA can’t fudge this stat again this year, it should be of no concern. The expansion of the definition of small continues under Contreras=Sweet – approximately 8,500 more giant businesses will be reclassified as small this year alone.

Businesses with 1-19 employees constitute 98% of all businesses in America, yet the SBA has left them all behind in favor of those that serve the politicians who “oversee” the SBA. This article simply demonstrates the obvious – if small isn’t big enough for the SBA to reward the politically connected, they will just make small bigger.

Hi Chuck, I think the issue is more complex. Yes, size standards have been adjusted. But:

(1) Businesses have grown larger over the years, and you have factors like inflation kick in. As this long document outlines, the SBA has a complex methodology for determining size standards.

(2) I am not ready to make the leap in logic to assume that the only reason the federal government met its goals was due to size adjustments. I haven’t seen any proof one way or the other. As a matter of fact, it would be good to see a breakdown of size of contract awardee for each agency, especially Defense, because it accounts the majority of the contract budget — but that’s not what this particular article is about. Do you have any idea where to get that breakdown?

Not surprisingly, the SBA was not forthcoming with the breakdown, so a Freedom of Information request has been filed by the ASBL. Stay tuned.

Without that information, we can only postulate, but we have significant other evidence on which to find these statistics way too suspicious too celebrate so quickly.

First, the existing size standards were already absurd. The European Union defines “small” as 1-9 employees. The Australian Fair Trade Act of 2009 formally defined “small” as 1-14 employees. Congress usually defines “small” as 20-25 employees, rarely as high as 50. 1-19 employees constitutes 98% of all businesses, yet the SBA’s definition includes all businesses up to 500, and some up to 1,500. A 500-employee business is in the 00.06% of the largest businesses in America. Their existing definition is so broad as to be meaningless. Expanding it is taking the absurd to the sublimely absurd.

Second, we see the direct impact of that expansion in all areas of SBA lending. In 2008, before the expanded definition, the average SBA loan was $182,000 and 24% of them were under $100,000 (the 98% need loans of $50k-$250k). By 2013, after the first large wave of expansion, the average SBA loan was a bloated $547,000 and less than 9% of them were under $100k (SBA Press Office). Banks and the SBA love the ability to give much bigger loans to significantly fewer businesses and still be able to claim they are helping “small” businesses.

Whether the expansion of “small” is the primary reason for being able to claim they’ve met the contract award goals, or is just one contributing factor, there is no denying it has a real impact on the numbers, and that it is out of synch with the entire world’s understanding of the word “small”.

This is a great achievement. Bravo. However, I personally think the goal should be made at least 35 per cent. I’ve my reasons too. Small businesses not only drive business but are also job generators. The more small businesses get contracts, the more they employ, and the more income generation takes place, leading to expansion of market. This will help the aggregate demand of the economy to increase, giving more incentives to businesses to invest to earn profit, settng the multiplier effect in motion.

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